The credit card rejection rate at Kasikornbank (KBank) has surpassed 30% of the applications received per month due to consumers' lower debt servicing ability amid swelling household debt.
Executive vice-president Chatchai Payuhanaveechai, without revealing precise figures, said the rejection rate represents only a marginal increase.
But he acknowledged that schemes such as government tax rebates for first-time car buyers have reduced consumers' ability to pay down their debt.
"Most car buyers taking advantage of this tax incentive earn 15,000 to 20,000 baht a month. Say the monthly instalment payment for a car loan is about 6,000 baht _ that leaves the consumer no more room to run up additional debt or qualify for higher credit lines from existing credit cards," said Mr Chatchai.
He said KBank also refuses to issue credit cards to those earning less than 30,000 baht a month but who already have three or four cards in their wallet.
The country's fourth-largest lender by assets also caps credit lines for such customers at four times monthly income.
The Bank of Thailand has set a minimum income level of 15,000 baht a month for credit card applicants and a maximum credit line of five times income.
Some 45% of KBank's credit card base of 2.8 million are gold cardholders earning 30,000 to 50,000 baht a month.
The other 55% hold platinum cards and have a monthly income of more than 50,000 baht.
The Bank of Thailand has thrown up a red flag regarding rising household debt, warning that households may default if the present low interest rates reverse to an upward cycle.
Central bank figures show Thailand's household debt had surged to 78% of the country's gross domestic product as of the end of last year from 63% at the end of 2010 and 44% on March 31, 2003.
Thanks to good risk management, KBank has kept its credit card non-performing loans at 1.4% of outstanding loans of 49 billion baht.
Given the ebbing domestic consumption, KBank's total first-half card spending of 110 billion baht missed the target of 120 billion, said Mr Chatchai.
But he remains optimistic that seasonal factors and promotional campaigns will help to boost credit card spending in the second half to meet the full-year target of 280 billion baht.